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J&J Strikes Deal with argenx to Co-Develop Cancer Antibody

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Johnson & Johnson (JNJ - Free Report) announced that it has entered into a global collaboration and license agreement with Dutch firm argenx to jointly develop and globally commercializethe the latter’s promising antibody, cusatuzumab(ARGX-110). The candidate is being evaluated in phase I/II studies for the treatment of acute myeloid leukemia (AML) and high-risk myelodysplastic syndromes (MDS).

Cusatuzumab is an investigational first-in-class SIMPLE antibody, which targets CD70, an immune checkpoint implicated for treating various types of cancers including hematological malignancies.

An ongoing phase I/II study is evaluating the combo of cusatuzumab and Celgene’s (CELG - Free Report) Vidaza (azacytidine) in newly diagnosed AML patients, who are not fit to take intensive chemotherapy. Data from the study showed an encouraging anti-leukemia activity in these patients.

Per the terms of the agreement, J&J is entitled to pay $300 million as upfront payment along with potential development/sales-based milestones and double-digit royalties on ex-U.S. sales provided the candidate gets an approval and is eventually marketed. Both companies will equally share costs and profits/losses in the United States. If approved, J&J will be responsible for global commercialization and will record worldwide net trade sales. In the United States, argenx has reserved the option to commercialize the drug.

The transaction is expected to close in first-quarter 2019, subject to customary closing conditions and the clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Notably, J&J’s investment arm Johnson & Johnson Innovation – JJDC, Inc. will make an equity investment in argenx SE.

Shares of J&J have gained 4.7% year to date, underperforming the industry’s increase of 10.4%.


J&J is actively seeking deals to strengthen its pipeline. In October 2018, the company signed an exclusive global licensing contract with Arrowhead Pharmaceuticals to develop and commercialize the latter’s RNAi therapy early-stage candidate, ARO-HBV, for chronic hepatitis b viral infection.

While Arrowhead will complete the ongoing phase I/II study on ARO-HBV, J&J will take over its development from phase IIb onward. J&J and Arrowhead also reached an option agreement, with J&J reserving the rights to choose up to three new RNAi therapeutics to be developed by the latter.

Zacks Rank & Stock to Consider

J&J currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the large cap pharma sector is Bristol-Myers Squibb Company (BMY - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bristol-Myers’ earnings estimates have been revised 6.6% upward for 2018 and 4.1% for 2019 over the past 60 days.

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